Gravel Company reported net income of $4,500,000 in 2021. The weighted average number of common shares outstanding during 2021 was 200,000 shares. Gravel paid $250,000 in dividends on preferred stock, which was convertible into 40,000 shares of common stock. How much is diluted earnings per share for 2021

Answer:

the diluted earning per share is $17.71

Explanation:

The computation of the diluted earning per share is shown below:

Diluted earning per share is

= (Net income - preference dividend) ÷ ( oustanding common stock shares + convertible shares)

= ($4,500,000 - $250,000) ÷ (200,000 + 40,000)

=  $4,250,000 ÷ 240,000 shares

= $17.71

hence, the diluted earning per share is $17.71

We simply applied the above formula so that the correct value could come

And, the same is to be considered

An example of a start of a start up cost

Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $25. Inventory is salvaged for $5. What is its maximum profit?

a. $10,500
b. $8,500
c. $7,500
d. $6,000